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Wall Street Reacts To Nvidia's Quarter

NVIDIA Corporation (NASDAQ: NVDA) reported another record quarter on Thursday, but the market wasn’t particularly impressed. Nvidia stock traded down more than 2 percent on Friday. Here’s what Wall Street analysts had to say about Nvidia following the report.

Low-Quality Beat

Deutsche Bank analyst Ross Seymore said Nvidia’s 10 percent revenue beat relative to its guidance was in-line with its recent average, but the quality of the beat was a bit disappointing.

“While growth remains strong across virtually every segment, the quality of the beat was somewhat lower as GPU channel fill and Crypto delivered the majority of the upside, while Datacenter was slightly below out estimate,” Seymore wrote in note.

Stifel analyst Kevin Cassidy said Nvidia delivered a solid quarter, despite revenue strength coming in large part from cryptocurrency demand.

“Due to investors' concerns around the volatility of the cryptocurrency market, the company may not get full credit for the beat to estimates,” Cassidy wrote.

Outlook Unclear

Morgan Stanley analyst Joseph Moore said cryptocurrency and the timing of Nvidia’s new gaming product cycle make second quarter numbers difficult to predict.

“This year is going to be tricky to calibrate, as the channel was starved of product 3 months ago, is still on the lean side (but we still have tough sequential comparisons because inventory built in April),and if it does launch this quarter, it will just be a partial quarter,” Moore wrote.

Bernstein analyst Stacy Rasgon said the biggest question for Nvidia in the near-term is gaming revenue and the impact it might have on Datacenter growth in the second quarter.

BMO Capital Markets analyst Ambrish Srivastava said investors can continue to expect Nvidia stock to trade at a premium to its peers due to its leadership position in the AI market.

“We believe the company expects sequential growth in each of the growth platform segments, albeit Gaming is going to be well below seasonal in F2Q vs. the much greater than seasonal results in F1Q (which were really driven in large part by channel fill, per our view),” Srivastava wrote.

What’s Already Priced In?

With Nvidia stock already up more than 1,000 percent in the past three years, analysts disagree about how much higher the stock can go.

KeyBanc analyst Michael McConnell said a lot of growth is already priced into Nvidia stock.

“We estimate the premium valuation of the shares already reflects future data center segment growth as well as reaccelerating gaming revenue growth in the second half of fiscal 2019,” McConnell wrote.